DAE finds buyer for Landmark FBO chain

 - December 20, 2007, 5:11 AM

Encore FBO and private-equity firm GTCR Golder Rauner on November 22 entered a joint definitive agreement to acquire Landmark Aviation’s FBOs from Dubai Aerospace Enterprise Aviation Holdings. The $436 million transaction is “subject to adjustment as provided in the purchase agreement,” according to a disclosure filed publicly by Dubai Aerospace Enterprise Aviation Holdings on December 13. According to Encore and GTCR, the acquisition includes all of Landmark’s 34 FBOs and its related charter, aircraft sales and maintenance parts assets but not the maintenance, repair and overhaul (MRO) division or Dallas Love Field-based completion firm Associated Air Center. The FBO, charter and sales division assets were offered for sale last August as DAE’s Airport Services Group.

The deal is expected to close in the first quarter of this year and will greatly bolster Encore’s chain of eight FBOs and two charter bases. No “massive changes” are planned for employees or management, though the combined company will be led by new CEO Dan Bucaro, the current president and CEO of Encore FBO.

Encore FBO executive vice president Donald Prescott said the Landmark and Encore FBO networks will form a single organization, “under the dominant Landmark Aviation brand,” of 42 FBOs across North America and Western Europe. Prescott told AIN that the strategy of the combined companies will remain the same: “to meet customers’ needs and provide value to customers.”

The combined Encore and Landmark FBO chain and charter and aircraft sales businesses will retain the Landmark brand name, raising the question of what DAE will call the Landmark MRO business. DAE bought the assets of Landmark Aviation, as well as Standard Aero, from The Carlyle Group in August for $1.9 billion. Landmark Aviation itself was a combination of Piedmont Hawthorne, Associated Air Center and Garrett Aviation assets. AIN has learned that the MRO businesses will be rebranded under the Standard Aero name, after the sale of the FBOs, charter and sales operations closes early this year.

An executive at a small FBO chain told AIN that DAE was shopping the DAE Airport Services Group for $500 million.

The 34 Landmark FBOs are selling for an average of less than $13 million each, but this doesn’t take into account the value of Landmark’s charter, aircraft sales, parts and other businesses, which are part of the deal, too. Two of the Landmark FBOs are at the same airport and might not be worth twice as much as a single FBO. The Airport Services Group that DAE put up for sale last year also included six maintenance shops that were associated with FBOs and six Hawker Beechcraft authorized service centers.

When Macquarie Infrastructure, owner of the Atlantic FBO chain, bought the Mercury Air Centers FBO chain last year, it paid an average of $19 million per facility. Macquarie also bought two FBOs at San Jose International Airport for $163 million, and FBOs at Santa Monica, Calif., and Newburgh, N.Y., for $85 million (for both). While it might appear that Encore and GTCR Golder Rauner got a bargain on the Landmark FBOs, several of the Landmark facilities serve small secondary markets and might not have been worth as much as a big-city FBO.

Encore has grown rapidly via acquisitions since its July 2006 inception. Those acquisitions include three FBOs in Europe and the recently announced purchase of Million Air Cleveland, last year’s buyout of Frederick Aviation in the Washington, D.C. market and the December 2006 purchase of full-service FBO Business Aviation Services in Sioux Falls, S.D.